On Yahoo Finance today, the headline Announces “Fed: super-low rates could fuel speculative bubble”
Huh? Do ya think?
How seriously does one need to be looking to see the building bubble in commodities? Lumber, maybe not, but Gold and other precious metals seem dangerously overpriced compared with production costs…
I guess it’s just a matter of time before we all quit our day jobs to be panning for gold in the Sierra Nevadas. What a waste of productive capacity. Digging for shiny metal that has little productive use. Sad, really sad.
Welcome to the new bubble. Same as the old one.
Hey Chuck,
Nice to see you posting like crazy. Speaking of which, I’m doing the Bridge to Nowhere hike in LA this Turkey day weekend.
I am planning to spend a few hours panning for gold too!
I’m changing my format on the site. I’m thinking of launching a new site, and I’m going to run an edgier message.
Chuck,
Great post, like always. Looking forward to the new format and/or website.
In regards to your commodities bubble theory, don’t you think people are flocking to commodities due to assumptions of inflation in the long run?
I believe that’s exactly what they’re doing.
Of course, I rely on 2 things here: 1. The masses are quite often wrong in financial things. 2. where is this “inflation” going to come from? Japan’s central bank pushed on a string the better part of 20 years now, and they’re still facing deflation.
Like stocks have P/E and housing has rent/own ratio, commodities have replacement cost. Many of them are way over theirs. We can place a lot of productive people in mining for gold at $450/oz to make these kind of profits.
I’m not going to tell you where to invest, but it would make sense to buy gold miners with this kind of price differential.
Chuck
Dude… Gold will rise relative to the value of the US dollar. If the Fed prints money like crazy, the obvious result is that it’ll take more dollars to buy the same amount of gold. That’s why we used to tie our currency to gold until 1971. There isn’t a bubble in precious metals – we’re destroying the value of our currency like every empire in the history of the human race that tried to operate a fiat currency.